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Sa 800
Sa 800
Contents
Introduction Scope of this SA.................................................................................................1-3 Effective Date ............................................................................................. 4 Objective ................................................................................................... 5 Definitions .............................................................................................. 6-7 Requirements Considerations When Accepting the Engagement .............................................. 8 Considerations When Planning and Performing the Audit .............................. 9-10 Forming an Opinion and Reporting Considerations ................................... 11-14 Application and Other Explanatory Material Special Purpose Frameworks ...................................................................... A1-A4 Considerations When Accepting the Engagement ...................................... A5-A8 Considerations When Planning and Performing the Audit.......................... A9-A12 Forming an Opinion and Reporting Considerations.................................. A13-A15 Modifications vis-a-vis ISA 800, Special ConsiderationsAudits of Financial Statements Prepared in Accordance with Special Purpose Frameworks Appendix: Illustrations of Auditors Reports on Special Purpose Financial Statements Standard on Auditing (SA) 800, Special ConsiderationsAudits of Financial Statements Prepared in Accordance with Special Purpose Frameworks should be read in the context of the Preface to the Standards on Quality Control, Auditing, Review, Other Assurance and Related Services1, which sets out the authority of SAs and SA 200 (Revised), Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with Standards on Auditing.
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Paragraph(s)
Introduction
Scope of this SA
1. The Standards on Auditing (SAs) in the 100-700 series apply to an audit of financial statements. This SA deals with special considerations in the application of those SAs to an audit of financial statements prepared in accordance with a special purpose framework. 2. This SA is written in the context of a complete set of financial statements prepared in accordance with a special purpose framework. SA 8052, deals with special considerations relevant to an audit of a single financial statement or of a specific element, account or item of a financial statement. 3. This SA does not override the requirements of the other SAs; nor does it purport to deal with all special considerations that may be relevant in the circumstances of the engagement.
Effective Date
4. This SA is effective for audits of financial statements for periods beginning on or after April 1, 2011.
Objective
5. The objective of the auditor, when applying SAs in an audit of financial statements prepared in accordance with a special purpose framework, is to address appropriately the special considerations that are relevant to: (a) The acceptance of the engagement; (b) The planning and performance of that engagement; and (c) Forming an opinion and reporting on the financial statements.
Definitions
6. For purposes of the SAs, the following terms have the meanings attributed below: (a) Special purpose financial statements Financial statements prepared in accordance with a special purpose framework. (Ref: Para. A4)
SA 805, Special ConsiderationsAudits of Single Financial Statements and Specific Elements, Accounts or Items of a Financial Statement.
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Requirements
Considerations When Accepting the Engagement
Acceptability of the Financial Reporting Framework 8. SA 210 (Revised) requires the auditor to determine the acceptability of the financial reporting framework applied in the preparation of the financial statements4. In an audit of special purpose financial statements, the auditor shall obtain an understanding of: (Ref: Para. A5-A8) (a) The purpose for which the financial statements are prepared; (b) The intended users; and (c) The steps taken by management to determine that the applicable financial reporting framework is acceptable in the circumstances.
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315, Identifying and Assessing the Risks of Material Misstatement Through Understanding the Entity and Its Environment, paragraph 11(c). 7 SA 700 (Revised), Forming an Opinion and Reporting on Financial Statements. 8 SA 700 (Revised), paragraph 15.
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A2. There may be circumstances where a special purpose framework is based on a financial reporting framework established by an authorised or recognised standards setting organization or by law or regulation, but does not comply with all the requirements of that framework. An example is a contract that requires financial statements to be prepared in accordance with most, but not all, of the Financial Reporting Standards of Jurisdiction X. When this is acceptable in the circumstances of the engagement, it is inappropriate for the description of the applicable financial reporting framework in the special purpose financial statements to imply full compliance with the financial reporting framework established by the authorised or recognized standards setting organization or by law or regulation. In the above example of the contract, the
In India, financial statements prepared for filing with income tax authorities are considered to be general purpose financial statements. Attention of the readers are also invited to the announcement published in The Chartered Accountant, August 1994 (page 224) which states that: It is hereby clarified that the mandatory accounting standards also apply in respect of financial statements audited under section 44AB of the Income Tax Act, 1961. Accordingly, members should examine compliance with the mandatory accounting standards when conducting such audit.
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SA 210 (Revised), paragraph 18. SA 200 (Revised), paragraphs 14, 18 and 22-23.
SA 320 (Revised), Materiality in Planning and Performing an Audit, paragraph 2. SA 260 (Revised), Communication with Those Charged with Governance.
Modifications vis-a-vis ISA 800, Special ConsiderationsAudits of Financial Statements Prepared in Accordance with Special Purpose Frameworks
Deletion
Paragraph A1 of ISA 800 deals with the examples of special purpose frameworks, which also includes a tax basis of accounting for a set of financial statements that accompany an entitys tax return. Since in India, financial statements prepared for filing with income tax authorities are considered to be general purpose financial statements and as per the announcement issued under the authority of the Council of the Institute of Chartered Accountants of India (ICAI) in August, 1994, the mandatory accounting standards should also be applied in respect of financial statements audited under section 44AB of the Income Tax Act, 1961, an example, A tax basis of accounting for a set of financial statements that accompany an entitys tax return has been deleted.
Appendix
(Ref: Para. A13)
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INDEPENDENT AUDITORS REPORT [Appropriate Addressee] We have audited the accompanying financial statements of ABC Company Ltd., which comprise the balance sheet as at March 31, 20X1, and the statement of profit and loss, and cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory information. The financial statements have been prepared by management of ABC Company Ltd. based on the financial reporting provisions of section/ clause Z of the contract dated July 1, 20X0 between ABC Company Ltd. and DEF Company Ltd. (the contract).
Auditors Responsibility
Our responsibility is to express an opinion on these financial statements based
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Opinion
In our opinion, the financial statements of ABC Company Ltd. for the year ended March 31, 20X1 are prepared, in all material respects, in accordance with the financial reporting provisions of section/ clause Z of the contract.
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The attention of the members is drawn to the decision relating to inclusion of the firms registration number, wherever applicable, in the audit report, taken by the Council of the Institute of Chartered Accountants of India at its 292nd meeting held on January 13, 2010 and the related Announcement is published in February 2010 issue of the Journal. 15 Partner or Proprietor, as the case may be.
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The financial statements have been prepared by management of the entity in accordance with the financial reporting provisions established by a regulator (i.e., a special purpose framework) to meet the requirements of that regulator. Management does not have a choice of financial reporting frameworks. The applicable financial reporting framework is a fair presentation framework. The terms of the audit engagement reflect the description of managements responsibility for the financial statements in SA 210 (Revised). Distribution or use of the auditors report is not restricted. The Other Matter paragraph refers to the fact that the auditor has also issued an auditors report on financial statements prepared by ABC Company Ltd. for the same period in accordance with a general purpose framework.
INDEPENDENT AUDITORS REPORT [Appropriate Addressee] We have audited the accompanying financial statements of ABC Company Ltd., which comprise the balance sheet as at March 31, 20X1, and the statement of profit and loss, and cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory information. The financial statements have been prepared by management based on the financial reporting provisions of Section Y of Regulation Z.
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Opinion
In our opinion and to the best of our information and according to the explanations given to us, the financial statements give a true and fair view of the state of affairs of ABC Company Ltd. as at March 31, 20X1, and of its results of operations and its cash flows for the year then ended in accordance with the financial reporting provisions of Section Y of Regulation Z.
Basis of Accounting
Without modifying our opinion, we draw attention to Note X to the financial statements, which describes the basis of accounting. The financial statements are prepared to assist ABC Company Ltd. to meet the requirements of Regulator DEF. As a result, the financial statements may not be suitable for another purpose.
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